Seeking Higher Revenue

As pointed out by respected blogger, Ross Clennett, Seek have changed the pricing structure for their Executive strain.

Those who do not know, Seek dropped it’s Executive tab late last year, and have instead tiered its fee structure to cover this defunct area. In effect, what it means is that roles advertised as $150k and above will be charged a higher premium than below that figure. Whilst this is a somewhat difficult to swallow outcome (sure, they did have the Executive brand beforehand, but one could choose whether it appeared here or not. Instead, it is automatically charged at the higher premium when the dollar figure is indicated), what gets me is the charge of a premium fee for contract roles $75 per hour and above.

What is the motive here? Is it, as Clennett suggests, monopolistic or smart? The cynic in me says monopolistic, but the realist says smart. Can a premium charge of $53.75 (+GST) on top of the already high $215 (+GST) charge for ‘normal’ ads be justified?

The cynic says no, simply because the contractor figure is a poor base level to change fee structures. Having worked a number of years in contract recruitment, particularly within the IT sector, which constitutes the line share of contract labour in the country, $75 per hour is an average figure. When considerations are made as to how the contract rates are decided upon (remember, there are no sick leave, holiday / recreational leave, bereavement leave or similar under contracting. Ergo, the rates are usually a little higher that permanent equivalents to compensate for these, and others), you can see why this is a commonplace figure. In addition, work out a permanent equivalent, over a traditional mark of 210 days worked (or 1680 hours) it only comes to a yearly figure of $126,000. Well below the $150k figure for the higher fee.

$75 an hour can be given to mid-level developers, junior / mid-level Project Managers, mid-level specialists and similar. Hardly what one would call ‘senior’, much less ‘Executive’.

This is what is rather confusing about Seek’s decision here, and why it seems that they have picked an arbitrary figure, popular amongst contract hirers, to make an extra bit of cash. Cynical, it seems.

However, the realist suggests it is because of the position Seek holds in the market why they have decided to do this. Quite simply, it is because they can. Holding a stranglehold over the online job board market (despite attempts to reign in market share from the likes of MyCareer and CareerOne), truth is there is Seek first and daylight second. So in this regard, they can up fees and people will still use them. Hence the question on monopolistic behaviour.

What will the net result of all this be? Frankly, Seek should lose market share. Not to the aforementioned MyCareer and CareerOne, but the likes of LinkedIn and other social media. This is the true competition to Seek and it will be an interesting 2012 to see how they will react to the continued growth of other non-job board entities.